New watch series 11, passcode settings greyed out, cant set up Apple Pay.

When I was setting up the watch it initially asked me to set up a passcode, which I did successfully.

However when I went to set up Apple wallet, it insists that I “must set up a passcode first”. When I go to passcode settings they are all inactive fields, except for wrist detection and complications, which I can toggle.

I have tried:

Switching iPhone and Watch off and on again (a few times)

Switching off VPN on my iPhone

Switching off complications and wrist detection

No luck with any of these fixes. Any ideas?